PSBs to Shut Down or Rationalize Unviable Overseas Branches – CORPORATE ETHOS

PSBs to Shut Down or Rationalize Unviable Overseas Branches

By: | January 8, 2019

Jan 8: With the public sector banks (PSB) gearing up to shut down or rationalize around 69 overseas operations in the coming months, we will see more rationalization of overseas banking operations in 2019. The move is to improve the cost efficiency, said a news report.

According to the reports, in 2018, planned rationalization of operations and examination of around 216 overseas operations of PSBs were taken up. Of this, around 35 overseas operations were shut down and 69 have been lined up for rationalization.

The impracticable foreign operations are being shut down. Meanwhile, the multiple branches in same cities or nearby areas are rationalized.

As per the reports on January 31, 2018, excluding the subsidiaries, joint ventures and representative offices, the PSBs had around 165 foreign branches. With 52 branches India’s largest bank SBI has the biggest overseas presence. Bank of Baroda comes second with 50 branches and at third slot is Bank of India with 29 branches.

In the UK, there are 32 branches of India’s state-owned banks. In Hong Kong and the UAE, there are 13 branches each while in Singapore there are 12 branches. In 2016-17, SBI came first in the list of loss-making branches. SBI had 9 such branches while Bank of India had 8. Bank of Baroda stood with such branches. In the year there were around 41 branches which were running on loss.

The banking sector agenda was announced at the PSB Manthan, a meeting held between the senior PSU bank executive and the government, in November 2017. Post the meeting, the rationalization drive came to effect. As per the agenda, for cost-effectiveness and collaborations in the foreign markets, the banks were to rationalize their overseas operations based on competitive strength and viability.

PSBs with overseas presence including Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, etc prepared a mutual consultation note for the rationalization of the foreign branches.